With this wound incessantly smarting at his heart; with all his great schemes and brilliant hopes of administrative success shattered into fragments; with a majority of bitter personal enemies in the Senate eager to obstruct every inch of his path; with a great part of his administrative machinery snatched out of his hands, and utter financial confusion around him; with a war against the richest and most powerful nation in the world staring him in the face, and almost certain domestic treason behind; with his own expedients invariably defeated, and with the most contemptible and shifting experiments in politics forced into his hands, Mr. Gallatin was now called upon to take up his burden again and march. He could not escape. Mr. Madison’s friendship, when forced to the final test, proved true, and Gallatin was fettered by his own act.
Of his whole public life, the next year, which should be the most important, is the most obscure. He wrote none but public letters. He never recurred to the time with pleasure, and he left no notes or memoranda to explain his course. Much, therefore, must be left to inference, something may be drawn from scattered hints, and most must depend on the well-known traits of his character and his habits of thought.
The last Congress had, before adjournment, sanctioned the President’s course in reviving the non-intercourse with England on the strength of the supposed revocation of the Berlin and Milan decrees by Napoleon. The Administration party, in doing this, took the ground that the act was the necessary result of a contract with France already carried into effect by her. Thus the United States took one more step towards war with England by precluding herself from acting in any other direction than as the Emperor wished; even the most flagrant deception on his part could not shake the compact so far as America was concerned. For the wholesale robbery committed on American property in Europe by the Emperor’s order, the United States mildly asked compensation. At about the same time Russia, then on the friendliest terms with France, directed her minister at Paris to intercede in favor of a similar claim on the part of Denmark. To Count Romanzoff’s representation Bonaparte only replied: “Give them a very civil answer: that I will examine the claim, et cetera; mais on ne paye jamais ces choses-là, n’est-ce pas?”[109] The American claim had small chance of success, but perhaps all that, under the circumstances, it deserved. On the other hand, all the events of the summer tended to war with England. Mr. Foster, the new British minister, instead of lessening the conditions of repeal of the orders in council, increased them. The British Court of Admiralty resumed its sweeping condemnations. The affair of the Chesapeake was at last settled by Mr. Foster, but the British sloop-of-war Little Belt was fired upon and nearly sunk by the United States frigate President; and, what was of far more consequence than all this, the people of the United States, more especially in the south and west, and the younger generation, which cared little for old Jeffersonian principles, were at last in advance of their government and ready for war. Henry Clay, John C. Calhoun, Langdon Cheves, William Lowndes, Felix Grundy, the leaders of the new sect, were none of them more than thirty-five years of age at this time, or about the age at which Mr. Gallatin had entered Congress more than fifteen years before.
The President and his Cabinet did not want war, but, if the people demanded it, they were not disposed to resist. Mr. Madison would not allow his Administration to fall behind the public feeling in its assertion and maintenance of national dignity; nevertheless, Mr. Madison seems at this moment to have had only a very vague conception of what he himself did want. Although he had a superfluity of only too good causes for war with Great Britain, he allowed himself to be hoodwinked by France into an untenable statement of his case against the British government. He then called Congress together on the 4th November, which was hardly a peace measure. Possibly he underestimated the temper of that body, for his message, sent in on the 5th November, 1811, though high in tone, did not recommend war; it recommended that “a system of more ample provisions for maintaining” national rights should be provided; it recommended Congress to put the country “into an armor and an attitude demanded by the crisis,” namely, the filling up the regular army, providing an auxiliary force, volunteer corps and militia detachments, and organizing the militia; but government had urged nearly all this for years past. Yet on the 15th November, only ten days later, Mr. Madison fully understood the situation, for he wrote to Europe that, as between submission and hostilities, Congress favored the latter, though it would probably defer action till the spring.
Mr. Gallatin’s report, which was sent in on the 25th November, was equally cautious. For the past year the Treasury showed a surplus of over $5,000,000, owing to the large importations under the system of open trade previous to February, 1810; but for the next year the estimated expense of increased armaments and the diminished receipts under the non-intercourse with England would cause a deficit of over one million dollars and necessitate a loan.
The public debt of the United States extinguished between the 1st April, 1801, and the 31st December, 1811, amounted to the sum of $46,022,810, and there remained on the 1st January, 1812, $45,154,189 of funded debt, bearing an annual interest of $2,222,481. This represents all that was directly accomplished by Mr. Gallatin towards his great object of the extinction of debt. This result had been accompanied by the abandonment of the internal taxes and the salt tax, but also by the imposition of the 2½ per cent. ad valorem duties known as the Mediterranean Fund. “It therefore proves decisively,” said the report, “the ability of the United States with their ordinary revenue to discharge in ten years of peace a debt of forty-two millions of dollars; a fact which considerably lessens the weight of the most formidable objection to which that revenue, depending almost solely on commerce, appears to be liable. In time of peace it is almost sufficient to defray the expenses of a war; in time of war it is hardly competent to support the expenses of a peace establishment. Sinking at once under adverse circumstances from fifteen to six or eight millions of dollars, it is only by a persevering application of the surplus which it affords in years of prosperity to the discharge of the debt, that a total change in the system of taxation, or a perpetual accumulation of debt, can be avoided.”
The report went on to discuss the provision to be made for ensuing years. The present revenue, under existing circumstances, was estimated at $6,600,000; the expenditure at $9,200,000. To provide for the deficiency an addition of fifty per cent. to the existing duties on imports would be required, and was preferable to any internal tax. “The same amount of revenue would be necessary, and, with the aid of loans, would, it is believed, be sufficient in case of war.” By inadvertence, Mr. Gallatin made here an important omission. He was speaking only of “fixed revenue,” sufficient to defray the ordinary expenses of government; and, as he was afterwards obliged to explain, this expression was wrongly applied to the case of war. He omitted to add that with each loan, provision to meet its interest must be made by increasing taxation; this fact had already been pointed out in the financial paragraph of the President’s message, quoted in a previous part of the report, but the oversight gave rise to subsequent sharp attacks upon the Secretary.
He then came to the question of loans, and expressed the opinion that in case of war “the United States must rely solely on their own resources. These have their natural bounds, but are believed to be fully adequate to the support of all the national force that can be usefully and efficiently employed;” but it was to be understood that if the United States wished to borrow money it must pay for it: “It may be expected that legal interest will not be sufficient to obtain the sums required. In that case the most simple and direct is also the cheapest and safest mode. It appears much more eligible to pay at once the difference, either by a premium in lands or by allowing a higher rate of interest, than to increase the amount of stock created, or to attempt any operation which might injuriously affect the circulating medium of the country;” and he proceeded to show that “even” if forty millions were borrowed, the difference between paying eight and six per cent. would be only $800,000 a year until the principal was reimbursed.
These were the chief points of the report, and taken with the tone of the message they indicate clearly enough that the Administration, now as heretofore, whatever the private feelings of its members might be, was prepared to accept any distinct policy which Congress might lay down. One of the main grounds of attack upon Mr. Gallatin was that he had habitually alarmed the public with the poverty of the Treasury, and by doing so had checked energetic measures of defence. The charge was so far true that Mr. Gallatin had never concealed or attempted to color the accounts of the Treasury. On this occasion he probably aimed, as was always his habit, at furnishing Congress with as favorable an estimate as the truth would permit, with a view to obtaining united and cordial co-operation between the Executive and Congress. His only mistake was in accepting the estimates of war expenditure then current. He himself could not wish for war, and still hoped to avoid it; he knew that the Treasury, in its present situation, could not stand the burden, but he had suffered too much from the charge of attempting to direct legislation, to allow of his again exposing himself to it without necessity.
The President and the Secretary of the Treasury were therefore in perfect accord; they did not recommend war, but they recommended immediate and energetic preparation. The President advised Congress to provide troops; the Secretary recommended increased taxes and a loan of $1,200,000, to pay these troops and support them. This was the extent of their recommendations, and it remained for Congress to act.